Wednesday, 21 November, 2018

Will Hurricane Harvey Affect Gas Prices? Texas Oil Refineries Were Hit Hard

TV news crew helps rescue stranded truck driver during Tropical Storm Harvey TV news crew helps rescue stranded truck driver during Tropical Storm Harvey
Andrew Cummings | 01 September, 2017, 02:05

Tropical Storm Harvey made landfall in Louisiana early on Wednesday after hammering Texas, threatening more infrastructure in the heart of the USA oil and natural gas industry.

"As of Monday afternoon, between 2.5 million bpd and 3.5 million bpd of refining capacity in the Gulf Coast region was offline due to a combination of refineries being shut down or running at reduced rates". Low oil prices made it more profitable for refiners to turn oil into gasoline, and they created even more than needed. Prices continue to decline as US crude inventories continued to increase at a rate of about 1.4 million bpd.

This came on the back of record US gasoline demand of 9.846 million bpd last week, and as USA refining utilization rates rose to 96.6 percent, the highest percentage since August of 2015.

Portions of the refinery were flooded after more than a foot of rain dropped overnight.

The storm caused the closure of refineries in the United States oil-producing heartland, which traders fear will lead to bigger crude stockpiles and push down prices.

Last week, EIA said output climbed to 9.53 million barrels per day, nearing the record high of 9.61 million reached in June 2015.

"This release sends a message to the market that the US government is willing to address any kind of supply shortages".

This makes it likely that traders in Asia will be especially tempted to book US cargoes priced against WTI in favour of other light crude grades priced against Brent.

EU's Barnier tells United Kingdom again to clarify Brexit positions
He added, "they have made it quite clear that we can not honor the decision of the referendum if we remain in the customs union and the single market".

Oil Prices Set To Rise as Supply-Demand Gap Closes Up
Prices would be higher if not for record refinery runs in 2017, said Matt Smith, director of commodity research at Clipperdata. The spread between Brent and U.S. crude hit its widest in more than two years on Tuesday, before rising slightly to $4.92.

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If he can convince working-class voters that Paul Ryan's tax plan will help them out, it means they'll literally believe anything. The president has already put pressure on McCaskill, tweeting Sunday that the senator stands opposed to "big tax cuts".

"Greg McKenna, chief market strategist at futures brokerage AxiTrader said the refinery outages would "see crude inventories build up".

Western Canada Select heavy blend crude for October delivery last traded at $10.75 per barrel below the West Texas Intermediate benchmark, according to Shorcan Energy brokers, having dipped to $11.40 per barrel below WTI earlier in the day.

Harvey battered into Texas on Friday as a Category Four hurricane, tearing down homes and businesses on the Gulf Coast, and triggering massive floods.

In North Texas, drivers reported fuel prices as high as $8.02 per gallon, NBC DFW reported.

But down the street, at the QT, people fumed at what they will have to become accustomed to - prices over $2.44 a gallon.

Other Port Arthur refineries also shut overnight, including Total's plant, where sources familiar with plant operations say they expect the water to recede by the weekend. Total SA's 225,500-bpd Port Arthur, Texas, refinery was shut by an early-Wednesday power outage, Gulf Coast market sources said.

"Not only Mexico but the rest of Latin America would be competing for those barrels", Ixchel Castro, senior analyst at energy consultant Wood Mackenzie in Mexico City, said in a Bloomberg interview.

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